Bitcoin Vs Ethereum Vs Ripple – Know The Major Differences

There are more than 1500 cryptocurrencies available on the CoinMarketCap today. Though bitcoin commands the market; a few other cryptocurrencies like Ethereum and Ripple are gaining popularity.

Aside from their shared competition for the crypto market cap and their use of blockchain technology, Ripple and Ethereum have very little in common. The two platforms have different goals: Ripple is a global, cross-currency payment system, while Ethereum is a software platform for decentralized applications and smart contracts. Bitcoin, on the other hand, can be used to buy or sell items from people and companies that accept bitcoin as payment.

Here is a short guide on how the three major cryptocurrencies differ.

Bitcoin

What is it?

Bitcoin is the original cryptocurrency. Using a newly distributed ledger known as the blockchain, the Bitcoin protocol allows for users to make peer-to-peer transactions using digital currency. No central authority or server verifies transactions, and instead, the legitimacy of a payment is determined by the decentralized network itself.

Who developed it?

The original Bitcoin Core (BTC) code was designed, written, and deployed by Satoshi Nakamoto (name used by the unknown person or persons who developed bitcoin ) under the MIT open source license. In 2008, Nakamoto outlined the idea behind BTC in the Bitcoin white paper entitled Bitcoin: A Peer-to-Peer Electronic Cash System, which described how the crypto-currency would operate. Bitcoin is maintained by a group of the enthusiastic developers and is a decentralized system which means it isn’t governed by any bank, government, or third party.

Technology?

A global network of computers uses blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis.

Use?

Bitcoin is used in the capacity of money and was developed as a digital currency with the aim of paying for services and goods.

Transaction time and fees?

Users can pay the miner to prioritize their transaction. Plus, when sending a Bitcoin transaction, its fee is proportionate to its size. The more inputs and outputs, the more expensive it is. As a result, average fees have risen to $27, while each transaction takes on average 40 – 70 minutes to clear. Thus, the transaction speed of Bitcoin is much slower than Ethereum and massively slow in comparison to Ripple.

Ethereum:

What is it?

Ethereum is an open software platform based on blockchain technology that enables developers to build and deploy decentralized applications. In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn ether, a type of crypto token that fuels the network.

A very important feature of Ethereum is the ability to create new tokens on the Ethereum blockchain. Tokens are a “cryptocurrency” of sorts built with specific smart contracts and used like any other – sending to and from addresses.

Who developed it?

Vitalik Buterin, a programmer from Toronto came up with the idea of a platform that would go beyond the financial use cases allowed by bitcoin. He released a white paper in 2013 describing an alternative platform designed for any type of decentralized application developers would want to build. The system was called Ethereum.

Ethereum makes it easy to create smart contracts, self-enforcing code that developers can tap for a range of applications.

Technology?

With Ethereum, every time a program is used, a network of thousands of computers processes it. Contracts written in smart contract-specific programming languages are compiled into ‘bytecode’, which a feature called the ‘Ethereum virtual machine’ (EVM) can read and execute.

Use?

In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn ether, a type of crypto token that fuels the network. Beyond a tradable cryptocurrency, ether is also used by application developers to pay for transaction fees and services on the Ethereum network.

Transaction time and fees?

When you send Ethereum, transfer tokens, interact with smart contracts and so you need to pay a fee in Gas, though the actual fee is paid in ETH. With Ethereum you always pay a fee, even if your interaction with the blockchain is not successful, unlike Bitcoin where an unsuccessful transaction will not result in you still paying the transaction fees.

So, if you send some Ethereum coins to a smart contract and doing so with not enough Gas, the coins will not be sent, but you still will have to pay the fee and it will be deducted from your balance.

Ethereum delivers a transaction speed of two minutes.

Ripple:

What is it?

Ripple, was created for banks and payment networks as a payment settlement, money transfer system, and currency exchange. The main idea of Ripple was to create a system of direct asset transfers in real-time which would be cheaper, more transparent, and secure than the existing payment methods, such as SWIFT payments.

Ripple is the name for both a digital currency (XRP) and an open payment network within which that currency is transferred. It is a distributed, open-source payments system that’s still in beta. The goal of the ripple system, according to its website, is to enable people to break free of the “walled gardens” of financial networks – ie, credit cards, banks, PayPal and other institutions that restrict access with fees, charges for currency exchanges and processing delays.

Who developed it?

Ripple was founded by a single company, Ripple Labs, and continues to be backed by it, rather than the larger network of developers that continue bitcoin’s development. It was founded in 2012 and the Ripple protocol, OpenCoin, was co-founded by CEO Chris Larsen and CTO Jed McCaleb.

Technology?

Ripple is a payment protocol, cryptocurrency creator and high-tech payment firm that uses blockchain technology to help banks conduct fast global financial settlements. It works off of their digital currency XRP tokens (ripples), which trades publicly on their own currency exchange. The Ripple network is managed by a range of independent servers comparing their transaction records constantly. A new ledger of Ripple is created each second.

Use?

Ripple runs on many of the same principles of Bitcoin, but for a different purpose: to serve as the middleman for all global FX transactions. The Ripple network is a totally decentralized currency exchange, while Bitcoin entails centralized ones. In fact, Ripple is essentially a global settlement network for other currencies such as USD, Bitcoin, EUR, GBP, or any other units of value (e.g commodities).

Transaction time and fees?

Ripple requires a minimum transaction cost to avoid overloading the network. To pay the fee, the network destroys the XRP rather than paying it to anyone in particular, which in turn increases the value of the remaining XRP. Ripple transactions can settle in as little as four seconds thanks to what’s known as “off-ledger” transactions. Since, Ripple offers its transactions in merely seconds, it has a massive advantage over Ethereum and Bitcoin at this time.

Visual Capitalist produced a useful infographic comparing various digital currencies. Click the image to view in full size.

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